Point-of-sale malware hits Louisville merchants

I went through the Burger King drive-thru the other night and the cashier asked for my credit card security code (the 3-digit code on the back of the card; you often have to provide it when shopping online). That was the first time in my life I've been asked for that code other than online. I'm wondering if that was in response to this malware issue. The cashier didn't seem to know what the code was for, but I'm keeping an eye on my account.

Chances are they didnt get a good read on the card. My POS requires a zip code and security code if we not get a good read on the card. We are charged more for these types of swipes and always try to get a good swipe but sometimes it isnt possible.

Eric, can you clarify a good swipe vs. a bad swipe of a credit card? As a laymen, I would think a CC swipe to be an all or nothing situation...either the CC # is identified or not.

DD

Eric, can you clarify a good swipe vs. a bad swipe of a credit card? As a laymen, I would think a CC swipe to be an all or nothing situation...either the CC # is identified or not.

DD

I'll take a shot at answering for Eric. A bad swipe is when the card reader simply cannot read the magnetic strip on the back of the card. If a system allows for a manual entry (typing in the card number) some will want some extra information that is typically embedded in the magnetic strip to help with the verification, such as the extra 3 digit security code and a matching zip code.

We've seen an increase over the past few months of "fake" credit cards. People are getting really sophisticated in creating them. We had a gift card that someone had managed to change the information on the magnetic strip so that it had someone's bank account information in California. We ran the card, transaction went through, and away the customer went. 1 hour later we get a call from the account holder in California asking about the transaction. In January, we had a traditional credit card that matched the name on the customer's drivers license (we ID and match on all credit card transactions to try and prevent fraud). Sale went through, and everybody was happy. One month later, we get the fraud notice on that sale and had to go through the process to verify we did everything we were supposed to do so that we could keep the money on the transaction.

In my case, the loser in both of these was Visa/Mastercard. If they are not able to get a better hold on fraud like this, I see a steep rise in credit card rates/fees as they can't keep absorbing loses over and over.

I know my bank has insurance to cover fraudulent credit card transactions. I have no idea what something like that costs, or if they can be 100% covered. But they have it.